Performance of initial public offerings (IPOs) : the case of Shariah-compliant companies
Joint Authors
Yaqub, Nur al-Wihdah
Sharif, Muhammad
Source
Issue
Vol. 27, Issue 1 (31 Oct. 2019), pp.65-76, 12 p.
Publisher
Islamic Development Bank (IDB) Islamic Research and Training Institute (IRTI)
Publication Date
2019-10-31
Country of Publication
Saudi Arabia
No. of Pages
12
Main Subjects
Abstract EN
Purpose - The purpose of this paper is to examine the informational value of Shariah-compliant disclosure in the Malaysian initial public offerings (IPOs) prospectus and whether Shariah-compliant status has an impact on the IPO initial return when adopted as a signalling mechanism.
Design/methodology/approach - It uses data from 320 IPOs for Shariah-compliant companies listed on the Bursa Malaysia between 2004 and 2013.
Findings - It finds that the degree of IPO underpricing for Shariah-compliant companies is 19.97 per cent with investors earning significant returns on the first trading day.
For the effect of different factors on the degree of IPO, we find that the size and type of IPO offers have a significant impact on the degree of IPO underpricing.
Other economic confidence factor models fail to yield economically plausible parameter values.
Originality/value - The study contributes to the literature in a number of ways.
It is the first to evaluate the effect of Shariah-compliance status regulation in Malaysian market, hence it provides an insight into the effectiveness of such regulation.
Second, while the existing Shariah-compliant IPO studies in the same market focus on Shariah status at the date of the studies being conducted, this study uses the information around IPO time.
The information that investors receive around IPO time may influence investors’ decision and valuation of the IPOs in the aftermarket.
Specifically, this study is different from the previous research, as it investigates whether Shariah-compliant companies would change the average degree of IPO underpricing for companies listed on Bursa Malaysia.
American Psychological Association (APA)
Yaqub, Nur al-Wihdah& Sharif, Muhammad. 2019. Performance of initial public offerings (IPOs) : the case of Shariah-compliant companies. Islamic Economic Studies،Vol. 27, no. 1, pp.65-76.
https://search.emarefa.net/detail/BIM-1241561
Modern Language Association (MLA)
Yaqub, Nur al-Wihdah& Sharif, Muhammad. Performance of initial public offerings (IPOs) : the case of Shariah-compliant companies. Islamic Economic Studies Vol. 27, no. 1 (Oct. 2019), pp.65-76.
https://search.emarefa.net/detail/BIM-1241561
American Medical Association (AMA)
Yaqub, Nur al-Wihdah& Sharif, Muhammad. Performance of initial public offerings (IPOs) : the case of Shariah-compliant companies. Islamic Economic Studies. 2019. Vol. 27, no. 1, pp.65-76.
https://search.emarefa.net/detail/BIM-1241561
Data Type
Journal Articles
Language
English
Notes
Includes bibliographical references : p. 74-76
Record ID
BIM-1241561